Excess lending a concern: SBI

State Bank of India (SBI) Chairman O P Bhatt today admitted that excessive lending to certain sectors at some banks was a cause of concern.

He, however, defended the lending pattern of banks saying it reflected the trends in the economy.

The entrepreneur decides where to invest and banks only fund the bankable proposals they receive, Bhatt said on the sidelines of a seminar on banking technology.

He said liquidity with SBI was enough to meet the growth in demand for loans. SBI has over 100 million customers.

Asked whether he would welcome a lowering of statutory liquidity ratio (SLR), Bhatt said it would make no difference to the country's largest bank.

The bank's investments in government securities to meet SLR requirements are about 30 per cent of liabilities, against the minimum required 25 per cent.

"We have a lot of room. We can fund out loans growth by selling SLR investments," Bhatt said. The union cabinet recently approved a proposal to amend the Banking Regulation Act to allow the RBI freedom to decide what the minimum SLR requirement should be.

Growth in bank deposits is lagging near-record lending in an economy that has grown at the fastest pace since the country's independence in 1947.

SBI expects its loans growth to be around 25 per cent in the financial year ending March 31, 2007, from around 30 per cent a year earlier.

SBI raised its prime lending rate by half a percentage point from December 27 to 11.5 per cent.